Sunday, March 22, 2009

Chinese stockpiling spurs copper price rally

Copper stockpiling by a secretive Chinese state organisation has helped trigger an impressive rally of 28 per cent in the price of the metal this year....

...Industry reports point to buying by the Beijing’s State Reserves Bureau, which manages the country’s strategic stockpiles.

SRB’s decisions are shrouded in secrecy, making it virtually impossible to assess accurately how much the Chinese government has bought. Traders estimate that the SRB is in the process of securing 300,000 tonnes and speculate that it could buy up to 1.2m tonnes this year. Global copper production last year stood at 18m tonnes.

David Wilson, metals analyst at Société Générale, said buying by the SRB has been the main driver behind rising copper prices. “Real demand has played little part in the current copper price rally and remains notably weak as global manufacturing activity continues to decline,” he said, summarising a view widely held in the copper market....MORE